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The Big Picture of Federal Management Reform
This chart, with the explanation below, was developed by John Mercer to illustrate key aspects of the relationship between the Government Performance and Results Act and certain other federal management reforms. At the Center -- a Focus on ResultsThe Government Performance and Results Act of 1993 (GPRA
Financial AccountabilityThe Chief Financial Officers Act of 1990 established a CFO at each agency, charged with implementing effective accounting and financial management systems. It also led to the establishment of the Federal Accounting Standards Advisory Board (FASAB). One FASAB standard now requires agencies to implement managerial cost accounting systems that can report the full costs – and from that, the unit-costs – of all government activities. This is a direct connection to the GPRA requirements, because it links dollars to program activities, which in turn generate outputs, which result in outcomes – thereby relating costs to results. The Government Management Reform Act of 1994 requires agencies to have comprehensive financial statements that are audited. The Federal Financial Management Improvement Act of 1996 seeks to hold agencies accountable for complying with the FASAB accounting standards, by requiring the reporting of lack of compliance. Budgets Tied to Performance GoalsThe President's Management Agenda, announced in August 2001, included a Budget and Performance Integration initiative as its top priority reform for federal agencies. This move toward performance-based budgeting was reiterated in the President's FY 2003 Budget, released in February 2002. OMB followed this with implementation of its Program Assessment Rating Tool (PART) in July 2002, which further underscored the requirement for agencies to integrate program performance goals into agency budgets. GPRA always envisioned performance-based budgeting, a format linking dollars to results by showing the underlying activities and their costs. This merging of GPRA performance plans with annual budgets shows how program activities (with unit costs) should lead to expected outputs and outcomes, thus suggesting how changes in funding levels should affect performance. Pay-for-PerformancePay-for-performance for federal managers is likely to be a major component of Civil Service Reform or any other reform of personnel systems. The President’s Management Council strongly recommended that agencies link managers’ pay to the measurable results their programs achieve, as defined in the GPRA plans. One approach is to reward reductions in the unit-cost of program activities and outputs, as well as increases in program results. Tying It All Together -- Information TechnologyIntegrating these reforms into an effective performance management system is an enormous challenge for an agency’s Information technology systems. Under GPRA all performance data and the underlying information systems have to be verified and validated. The Clinger-Cohen Act (1996) and OMB Circular A-130 require agencies to justify each major IT acquisition based upon how it will support achievement of the goals in their GPRA plans. And if managers are to be able to manage their programs to meet the specified goals – especially if their pay is based on success – they will need accurate information on program cost and performance throughout the year.
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